Category: Business Start Up

SETTING EFFECTIVE KPIs

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SETTING EFFECTIVE KPIs.

 Setting goals and a strategy for your business is important. However you then need to measure how the business is performing in order to understand if the firm is moving forward and is on track to achieve its goals. As such it is necessary to set Key Performance Indicators (KPIs). However many business owners and managers find this difficult to do and see the establishment of KPIs as a pen-pushing exercise and don’t dedicate time to do this.

KPIs however, form a vital element of the business’s sales strategy, both for individuals and for the team itself. In order to create a shared vision, commitment and firm-wide motivation, it is vital that the KPIs are discussed with and agreed by each member of the team from the outset. KPIs should cover:

KPIs

 

  • Team targets (i.e. convert 75% of all leads during the first quarter of 2015)
  • Individual targets (i.e. 80% of chargeable time billed each month in 2015)
  • Key tasks

 

 

The nature and specific tasks of your KPIs will depend very much on variations including the market sector and geographical area in which you operate. However, managers must ensure that they follow the SMART principal – that is, ensuring that objectives are Specific, Measurable, Attainable, Realistic and Timely.

Depending on your business, it can be useful to adopt a traffic light approach for each client account, so areas of strength and weakness can be easily and quickly identified. This data can be fed into charts which can also be very useful when preparing KPIs, giving specific objectives and demonstrating how the results have a direct impact on the overall sales and business objectives.

Once set, KPIs should then be reviewed on a regular basis, both with the team as a whole and with individual team members. Any variance in performance can then be identified and flagged appropriately, with remedial actions put in place before any aspect of the traffic light chart turns to amber. Bear in mind that KPIs should always be dynamic. For example, even if a KPI target hasn’t been met, the individual or team performance may still be on course to achieve the overall sales objective, and the KPI target may need to be lowered. Similarly, if a target has been met, then it may need to be increased at intervals, to maintain drive and motivation.

 

EXECUTING STRATEGY

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EXECUTING STRATEGY.

Failing to plan, plan to fail. We all know this. However, many businesses who create a strategy or business plan fail to execute it to any significant degree. This is because it requires change, commitment, innovation, leadership and numerous other things to align your business in a way that facilitates the execution of your plan.

These 5 steps will help you to successfully execute your business strategy:future

Clarify your vision

Define what the business will look like if your strategy is executed successfully. Develop a summary of that vision and communicate it to all stakeholders. Communication must also be consistent – keep the vision in front of your team and make it a part of their daily lives. People cannot follow you successfully if they don’t know where you want to go.

Set goals

As part of your planning process, you should develop 4 or 5 critical goal categories. Each of these categories should be broken down and given specific goals with due dates, metrics to show progress and the names of the people that are accountable for their completion.

Align systems and people

This is the step where most businesses encounter trouble with strategy execution, as they do not take the critical step of aligning people and processes to attain their vision. They just assume that the firm will “figure it out”. All systems, people, incentives and business processes must be aligned with the new strategy. People must understand what they need to do and how their role affects successful execution of the strategy. They must get help in establishing priorities on what to do, as well as what not to do, to ensure that the overall strategy doesn’t get lost in the day-to-day.

Review

The business should hold annual reviews of their current strategy and how outside forces have impacted on it. The aim of the review should be to determine whether the strategy is still valid, whether the firm is making adequate progress and what customers think. Strategy execution doesn’t just happen; it must be driven with the same commitment that built the business in the first place.

 

 

PRICING FOR PROFIT

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Pricing For Profit in your business.

No matter what type of business you run, pricing for profit is one of the most important factors of your marketing strategy. Correct pricing can make your product or service a hit or a failure in the market. Here are a few pricing strategies to consider:

Generic or Economic pricing

In this strategy, the buyer is attracted by a low price. It is typical of generic or economy brands. For this strategy to prove successful, you should have a low cost structure, minimal features and promotion. Simultaneously, ensure that customers reap some solid, stable benefits. If you wish to go for an economy price strategy you will probably have to focus on selling increased volumes as margins are likely to be tight.

Differential pricing

With this model, the idea is to set the price according to different buyer types, (e.g. the price will differ for an online, retail and a direct sales channel). Another consideration is geographical area as prices can be higher in London than in say, Leeds. Quantity also plays a part as a customer buying a larger volume of your product or service can get a better rate than a one-off purchase. A note of caution – there has to be a valid reason for applying differential pricing. For example – you can charge more in London on the basis that your staff costs are higher.

Premium pricing

This strategy is applicable for luxury or high end goods or services such as expensive yachts, the very best legal services and so on. You can use this strategy if the market recognises your product or service as a luxury or premium item. Again, you should consider this strategy carefully and bear in mind who your clients and potential clients are.

Captive product or companion product pricing

This strategy focuses on bundling products or services into a package. Perhaps a product is a captive market – if you buy a mortgage you also need home insurance, for example. If you bundle the two products together as one package you are more likely to secure a sale of the two products. The prices of these products outside a package usually tend to be higher.

Remember to review your products and services carefully before choosing a particular strategy so that the pricing is appropriate for your target market. Research your competitors and benchmark for pricing.

How to turn your financial goals into reality!

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Register To Attend This Free Seminar Here

Date: Tuesday 29th May 2012

Venue: Imperial Hotel

Time: 6pm to 8pm

An evening seminar held in the Imperial Hotel Cork, on Tuesday 29 May will address many key issues relating to your personal and professional financial security whilst providing advice on good planning and how to make the most of your financial advisor.

•Do you clearly understand your personal and professional financial goals?
•Is your Financial Adviser or Accountant aware of these goals?
•Do you know what questions to ask when enquiring about financial options?
•Are you protecting your business interests?
•Do you want peace of mind knowing your loved ones are taken care of financially?
•Do you have a Pension?
•Are you saving for retirement?
•Have you recently carried out a Financial Health Check?

These questions and many more will be addressed on Tuesday, 29 May by guest speakers, Ms Carla Manning, Owner, CACM Accountants and  Sandra Maher, Managing Director, Inspire Financial.

Financial reviews are becoming more and more important in the current climate. It is advisable to put good plans in place which in the long-run will save money and ensure tax efficiency. Anyone interested in learning more about protecting their future financial well-being and gaining peace of mind should come along to this event on the 29 May. Light refreshments will be served at registration.

About The Speakers

About Carla Manning:

Carla Manning ADCA, CPA is the owner of CACM Accountants and Registered Auditors, a proactive and innovative accountancy practice based in Cork. As well as providing general accontancy services such as accounts preparation, audit and taxation services, we provide a full service for new business start ups. Carla has continually seen the areas where small and medium sized businesses struggle to develop and grow their business while also trying to maintain proper books and records and assess the financial affairs of their business. We pride ourselves in working closely with our client’s through the year so as to ensure that our client’s have the necessary support and advice needed in these clallenging times.

About Sandra Maher:

As Managing Director of Inspire Financial Options Sandra Maher has a proven history of giving Financial Advice in a wide range of personal and business situations. Having worked in Permanent TSB for twenty five years, Sandra has forged strong relationships within the industry. In her role as Senior Assistant Manager at permanent tsb she gained extensive expertise in risk assessment, lending, debt analysis, budgeting and customer relationship management. Sandra left the bank in 2006, setting up her own business as an independent financial adviser in Cork City.

Get more information

Register Here Now!

 

Health check for your business

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Some easy things for you to check

Whether you are just starting out in business or whether you’ve been around for sometime, it is always worth taking time out to make sure you are claiming all deductions for allowable business expenses. When trying to figure out if an expense is allowed as a business expense or not, remember the basic rule – in operating your business, you are entitled to claim a deduction for any business expense you have incurred in order to earn your profit. There are many items that are clearly regarded as a business expense and include such items as:

-Purchase of stock for re-sale
-Wages and salaries
-Rent and rates of business premises
-Repairs and maintenance
-Light and heat
-The running costs of vehicles used in the business (service costs, motor tax, insurance)
-Accountancy fees
-Legal and Professional fees
-Advertising and marketing costs
-Interest paid on any monies borrowed to finance business expenses/items,

This list is not exhaustive – so it is worth checking all your outgoings regularly to make sure you are including all relevant business expenses.

Expenses Not Allowed

Unfortunately, there are certain expenses that cannot be claimed as a business expense at any time. You cannot claim for any private expenses or any expense, not wholly and exclusively paid for the purposes of the trade or profession. Such items include:

– Any private or domestic expenditure, e.g. your own food and clothing (except protective clothing)
– Income Tax
– Business entertainment expenditure which includes the provision of accommodation, food, drink or any other form of hospitality. Staff Christmas parties are allowed.

Confusion often surrounds the area of Food and Meal Expenses. The rules relating to food and meals are actually quite clear – the cost of meals taken at the place of business are not allowable for tax purposes. Meals consumed away from the place of business are, in general, not regarded as being wholly and exclusively laid out for the purposes of the business. Revenue’s view point on this is that everyone must eat in order to live and so whether you are working or not, you would still have to eat. However, where the nature of a business involves travelling or where occasional business journeys outside the normal pattern are made, then the cost of meals maybe allowed as an expense.

The cost of work clothing such as business suits are not allowable business expenses either. Again, the view point has been taken by Revenue that an individual has to wear something for heat, warmth and decency and so it has been held that any expenditure on clothing is not wholly and exclusively for the purposes of the business. The cost of any protective clothing is fully deductible.

Pre Trading Expenses

If you have only recently set up in business, you may have spent quite a bit before you ever started trading. The good news is that whether you are a limited company, sole trader or partnership, you can claim for certain pre-trading expenses. A deduction is allowed for pre-trading expenses which are incurred
in the three years prior to commencement of the trade or profession and would not normally be allowable, but would have been allowable if they had been incurred after the date of commencement of the trade or profession.
Examples of pre-trading expenses might include accountancy fees, advertising costs, costs of feasibility studies, costs of preparing business plans, rent paid for the premises from which the business operates. The allowable amounts are treated as having been incurred at the time the business commences.

Expenses Part Business, Part Private

When an expense is incurred and it relates to both business and personal/private use, then only the amount that relates to the business portion is allowed as a deduction. An example of such an expense would be telephone costs or light and heat costs where a business is operated from a home office. The total costs should be split between business and private and only the business portion is allowed as a deduction. For light and heat, the easiest way to apportion the cost is as a percentage of the total floor area of the house. It is worth bearing in mind though that if you sell your home (the profit from which is normally exempt from capital gains tax) the portion that was used for business purposes will be subject to capital gains tax.

The above is an outline of the principles surrounding business expenses and is intended for general guidance only.

Expences – Getting it right.

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In light of the taxation issues, the most prevalent method in respect of payment of employee expenses is by the re-imbursement of vouched expenses i.e. repayment to the employee of expences actually incurred for which they have appropriate receipts for. When such payments are made to the employee and the payment is no more than reimbursement of a receipted expense, it is not treated as pay for tax purposes.
Other methods of dealing with employee expenses include:-

Flat rate employment expenses.

A standard flat rate expenses deduction is set for various classes of employee’s. The amount of the deduction is agreed between Revenue and representatives of groups or classes of employees in advance (usually the employees are represented by trade union officials). Such groups of employees that are entitled to this flat rate expense include nurses, teachers, firemen, journalists, certain professions/trades employed by the civil service and local authorities, shop assistants to name a few. A detailed list is available on the revenue website.
Round Sum expenses.

This is where the employer agrees to pay an employee an agreed amount each pay period in addition to normal salary to cover expenses. The expense amount agreed is treated as “Pay” and is taxable in the same way as if it were part of the normal salary payment.
Meal allowances: In the same way as agreed flat rate expenses, where employers pay a sum towards the costs of employee’s meals, it is treated as taxable pay.

Meal Vouchers.

Where an employer provides luncheon or meal vouchers to employees, the value of the voucher (excluding the first 19 c per voucher) must be treated as pay and appropriate PAYE/PRSI deducted in the normal manner.

Canteen Meals.

Where an employer provides free or subsidised meals in a staff canteen for staff generally, the value of the meals provided to employees are not treated as pay for tax purposes. However, the facility must be available to all employees in the company. If the facility is only available for certain employees, then the exemption will not apply and tax will need to be deducted on the value of the meals to the employees entitled to the facility.

Consumer Sentiment improved again in February 08/03/2011

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The overall KBC Ireland/ESRI Consumer Sentiment Index rose in February to 50.3. This compares to a figure of 48.7 in January, and a value of 59.4 in February 2010. The February reading remains above the all time low of 39.6 in July 2008 but it is still considerably lower than the all time high of 130.9 in January 2000.

Commenting on the results David Duffy, ESRI, said

  • “Consumer sentiment improved in February, due to an improvement in the forward looking expectations index which rose to 37.8 in February, from 31.5 in January. In contrast, the index of current economic conditions weakened to 68.9 in February from 74.2 in January.”
  • “Although sentiment has improved, the underlying figures suggest that any recovery in confidence remains tentative. Part of the improvement in sentiment is due to a move from a negative to a neutral outlook by respondents, suggesting a cautious outlook by consumers. The underlying message from the analysis is that consumers remain cautious in the present circumstances.”

In addition, Austin Hughes, KBC Ireland, noted:

  • “The slight rise in consumer sentiment in February is surprising in the light of a lot of bad news during the survey period. The run-up to the election focussed heavily on Ireland ’s economic problems and we also saw downward revisions to growth forecasts as well as further increases in energy and food prices. In these circumstances, the marginal increase in sentiment hints that Irish consumers have prepared themselves for a lot of bad news. They may also have responded to evidence of stronger global growth as well as tentative signs of improvement in a variety of domestic economic indicators.“
  • “It should be emphasised that even after the slight improvement seen in February, current sentiment readings are far below the long term norm. So, it is clear that Irish consumers are fairly gloomy at present and, of course, they face further problems. In particular, looming ECB interest rate increases could take a further toll on confidence in the months ahead. That said, February survey results hint at some resilience in sentiment which might suggest spending may not be quite as weak as feared.“

Note:- Since May 2008 the KBC Ireland/ESRI Irish consumer sentiment survey was prepared using a slightly different methodology.   While this may have a minor impact on the precise numerical estimates of various survey components, it should not have any significant effect on the broad trend reported.

Published with the permission of David Duffy of the ESRI

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Getting paid on time.

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All businesses are competing with suppliers for their customer’s money. The business with the best credit control system will get paid first. The groundwork for getting paid on time starts with the beginning of a new customer/client relationship. Every business needs to have a system in place for accessing a potential customer’s credit worthiness, whether it is a policy of requesting credit references, bank references or using publicly available information or credit bureaus.Once you are satisfied with the credit references, the next step is to ensure that there are written terms of business, which should include payment terms, provided to the customer. Do be aware though that for a contract to be legally enforceable it must contain certain elements and it is always wise to seek professional legal advice on this.

We all know that there are different categories of customers when it comes to collecting payment. In these difficult times, we all try our best to be reasonable and fair, particularly where in the past the customer has always been a good payer. The main thing is to ensure that as a business, you limit your potential exposure. The most difficult categories for all business to deal with are firstly, those that can pay some debts, but can’t pay it all and secondly, those that won’t don’t and never pay.

A good cash collection system should be flexible, reliable, secure, adaptable and economical. Most importantly, the system needs to be operated in a firm, but intentional manner. If a customer gives you a date for when payment will be made, if not received, a telephone call should be placed immediately. Information about the customer’s accounts department including their payment processing system should also be obtained as this can avoid delays in the issuing of payments.

When preparing to make a cash collection telephone call, it is important to make sure that you have all relevant information and be prepared with possible responses to the standard excuses such as “the cheques in the post”. You must remain firm and ensure that you finish the call with a definite answer.

Reducing cash collection time can also be helped with the use of electronic invoicing over traditional paper invoices. It can save time (not to mention costs) on the delivery of invoices and statements. Encourage electronic payments, standing orders and direct debits where appropriate. Accepting card payments and discounts for early payment can also encourage early payment.

Unfortunately, where telephone calls and reminders don’t work, things need to be ramped up a bit. Clear concise cash collection letters may ensure that the correct person is aware of the outstanding debt and result in settlement. Applying late interest payments may also speed up the collection. However, you need to decide the time that will be spent on something like this if you are aware that the inevitable result will be legal action.

  • Immediate steps that you can now take to improve cash collection include.
  • A review of your current terms of business/contracts.
  • Ensure that payment terms are clearly stated.  
  • If a written contract, make sure that there is an agreed reference to what interest will be payable on late payments 
  • Ensure system in place for monitoring agreed payment terms and unpaid debts
  • Enforce the credit control procedures firmly, but vigorously.

Remember, good communication and negotiation skills are absolutely necessary when collecting debts. Keep making the calls, square off any excuses and always make sure that you end each call with a firm commitment and follow up if required. A company needs to make sure that they are always “first in line” to ensure that what cash a customer has comes your way.